Mark Hurd: The Oracle Of The Channel

Mark Hurd lays the foundation for Oracle's channel charge

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“Working well” is just how partners describe the Oracle channel zeitgeist right now. But that isn’t enough for Hurd, who is now moving to simultaneously expand both Oracle’s channel sales and direct sales coverage by 25 percent. He also is driving the direct and indirect sales teams to “attach, attach, attach” to get them to sell an end-to-end Oracle stack of hardware, software, maintenance and services. All of the changes have pushed Oracle’s sales intensity higher as the company aims to double its size in the years ahead from $40 billion to $80 billion, according to partners.

Oracle is, indeed, looking less and less like an old-school, direct-sales-dominated enterprise software company and more like a partner-friendly maker of finely tuned integrated hardware/software appliances such as the Oracle Exadata Database Machine and Exalytics Business Intelligence Machine. Those hardware/software-engineered systems are aimed at delivering in the enterprise the same kind of breakthrough user experience that Apple brought to the consumer market with the iPad and the iPhone. Oracle even refers to its Exadata product as the “iPad of the enterprise.”

“It is the same concept,” said Hurd. “That if you can engineer these things together you are going to get a better answer. You are going to get a better experience.”

Using his sales operations know-how and management muscle, Hurd has charted a new course in the hopes of providing that better experience for Oracle partners. Part of that involves a Hurd-designed sales plan that has focused Oracle’s direct sales force on the top 2,000 global accounts and Oracle’s partners on the hard-to-reach midmarket and even SMB accounts. (Oracle stresses that the demarcation does not prevent Oracle partners from playing in those top 2,000 accounts, so channel conflict is something the company may have to manage as the partner base grows.) Hurd’s channel philosophy is simple: To build a long-term and sustainable channel model, it must be economically viable for both sides.

“For this to be interesting it has got to be strategically sound for Oracle,” said Hurd of the channel march. “Therefore, sustainable for the channel partner to invest. It has got to be structural. It has got to be strategic. It has got to be thoughtful.”

For Oracle, that means looking at the market differently than it has historically when it was strictly a database software company focused almost exclusively on the largest customers. Building things for the broader market means putting together a new sales and operations model that changes compensation metrics and targets for both Oracle’s direct and indirect sales channels. Among the changes: the first-ever Oracle solution provider hardware rebate incentives; new pay-as-you-grow software licensing flexibility (heresy in the old Oracle) for a new SMB hardware appliance called the Oracle Database Appliance; and, of course, the line in the sand that focuses Oracle’s 22,000-member-plus direct sales force on the global 2,000 top accounts and the company’s 20,000 partners on the broad SMB market.

That demarcation represents a watershed moment for Oracle, whose direct sales force -- considered by many to be the highest paid and most aggressive in the technology business -- had for years been given free rein to do whatever it took to win high-priced software license deals even if it meant pulling deals away from partners. Just as importantly, Hurd also changed the compensation for Oracle’s own channel reps, paying them only on those deals outside the top global 2000 accounts.

Hurd said all of the changes are simply a matter of expanding Oracle’s distribution by getting its direct sales reps and channel partners to stay in their lanes. He compared the immature channel models that far too often pass muster to 5-year-old kids playing soccer. “All the kids, if you watch them, they all run to the ball,” said Hurd. “When you get to more mature soccer games, people stay in their position and they strategically align to go try to make a grander thing happen. It is the same way with distribution models. We need people playing their positions. Our job is to instrument how we market and distribute that model in a way that everybody is participating and covering the market.”

The channel makeover could have a big impact on industry-standard hardware makers, including Hurd’s old employer. Up until the Sun deal closed, HP and other industry-standard hardware makers never had to battle Oracle for the hardware sale on Oracle applications. Oracle estimates that it has 380,000 customers with as many as 300,000 not running its software on Oracle hardware. Now, Oracle is driving its partners and direct sales force hard to move every single one of those 300,000 customers to the Oracle Sun hardware. One of Hurd’s top priorities when he landed at the company was, indeed, fixing the Oracle hardware sales metrics.

With the sweeping changes now in place, Oracle has made no secret of its intention to aggressively recruit partners. Judson Althoff, senior vice president of worldwide alliances and channel sales, has singled out HP partners as one of the prime targets in a campaign aimed at growing Oracle’s partner ranks to 25,000 over the next year. “It’s a huge focus for us,” said Althoff. “We have great products. We have a target market that is ripe. And we have got an economic proposition that is going to pay them more money. That is a trifecta winning combination.”

Oracle is certainly seeing partner interest and sales on the rise. Oracle’s OpenWorld conference this year attracted 4,500 partner registrants, up from 2,100 last year, said Althoff. “This is the largest Oracle Partner Forum in history by a long shot,” he said. And Oracle’s indirect channel sales growth over the past three years has charted higher than sales gains from the Oracle direct sales effort, with more than 40 percent of Oracle’s worldwide sales and 80 percent of worldwide transactions now going through partners. “It is exciting times,” said Althoff. His focus, he added, is squarely on growing “that broad market where we have the channel focused at a much, much higher rate than the rest of the business.” It’s part of a strategy that Ellison, who founded Oracle 34 years ago, refers to as “The Sun Also Rises.”